GM Support From Analysts Belies Post-IPO Drop: Chart of the Day
General Motors Co. (GM) has a relatively high standing among Wall Street analysts even though shares of the largest U.S. automaker have fallen during their first six months of trading.
The CHART OF THE DAY compares the overall rating on GM, as compiled by Bloomberg from brokerage recommendations, with the stock’s price since its market debut on Nov. 18.
GM is rated higher than 90 percent of the companies in the Standard & Poor’s 500 Index, according to Bloomberg’s data. The Detroit-based company stands at 4.47 on a 1-to-5 scale, with 5 meaning unanimous “buy” ratings. Even so, the stock has fallen as low as $29.17, down 12 percent from the original price.
“Few analysts seem concerned” that GM is struggling to live up to expectations at the time of the automaker’s initial public offering, H. Peter Nesvold, an analyst at Jefferies & Co., wrote two days ago in a report.
Earnings before interest and taxes, a profitability gauge, for GM’s North American and emerging-market auto business were 30 percent below initial projections for the first quarter, Nesvold wrote. He determined the shortfall by reviewing data from six brokerages that led the IPO.
Nesvold, who made Zacks Investment Research’s All-Star Analyst Survey list while at Bear Stearns Cos., has rated GM “hold” since he began following the automaker on March 18. In the next 12 months, he sees the stock reaching $36, the lowest projection of 12 analyst estimates compiled by Bloomberg.
The U.S. Treasury has decided against selling more shares of GM before August, according to two people familiar with the decision. The Treasury accounted for most of the IPO’s shares and still has a 33 percent stake.
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